If a sense of déjà vu surrounds the fate of the multi-crore Pearls Group (which was asked by Sebi last Friday to return Rs 50,000 crore to its five crore investors) it’s not misplaced.
But even those who have heard the story of the debacle of Golden Forests India Limited (GFIL) and its empire of over a 100 companies may not know that PGF Limited and Pearls Agro Corporation Limited (the two companies under the Sebi and CBI scanner now) not just worked on the same business model but has the same set of people behind it.
R K Syal, the man behind the meteoric rise of the GFIL and Nirmal Singh Bhangoo, who heads the Pearls Group empire, had put their heads together in the early 1980s chiseling the “land for investment” business for themselves.
Syal was an assistant manager in Chandigarh’s tourism department and Bhangoo was struggling with his dairy farm in the village. Some say both were working for Peerless, a general finance company, as part time agents then.
Two separate versions are available of what happened next. While Syal’s associates say that Syal and Bhangoo started Pearls General Finance Ltd in 1983 gathering investment from people promising to multiply their money, with land units as guarantee, Bhangoo’s associates say Syal “only worked for the company”.
“It was Syal who gave the idea of having land units as security in lieu of investments. His idea was that the increasing cost of the land or development on that land would continue to pay for the dividends to the investors. PGF was set up by Bhangoo, Syal and one Vidya Sagar. Later Vidya Sagar and Syal started GFIL. Vidyasagar died in an accident,” recalled a close family associate of the Syals who requested not to be named.
In 1985, Syal and Bhangoo parted ways and Syal set up GFIL in 1987. In 10 years, Syal turned GFIL into a 100 company empire, run from just two shop-cum offices in Mani Majra. He made his kin head major companies buying 10,000 acres of land and other commercial properties around the country.
The company’s website says that GFIL was set up with a “simple yet amazing concept” of “economic freedom for all” where every investment made in the company was secured in the shape of land units which were allocated to each and every investor. “In case of any lapse of maturity the investor had the right